“For too long, economic and political success has been measured solely in terms of the rate of growth of economic activity.
This is difficult to justify. Few people actually want a higher level of GDP for its own sake.
People welcome a higher level of economic activity because they believe it will lead to higher levels of employment, more prosperity for more people in the community, a higher standard of living, and a better quality of life.”
“GDP takes no account of social or environmental issues.
Indeed, environmental disasters can actually lead to increase in GDP, if extra money has to be spent cleaning them up.
Furthermore, GDP fails to reflect the underlying sustainability of any pattern of economic activity. An economy which grows rapidly on the basis of oil reserves is depleting a non-renewable asset.
This ought to be reflected in accounts, but is not. Conventional accounting acts as if there were no tomorrow, or at least, no next century.
As Herman Daly of the World Bank puts it: 'There is something fundamentally wrong with treating the Earth as if it were a business in liquidation".
“We need therefore, to measure the quality as well as the quantity of economic growth. Not all forms of economic activity have an equal impact.
A sustainable economic policy will aim to optimise environmentally-beneficial activity, recognising that there are limits to the pollution that can safely be emitted, and that the consumption of non-renewable resources needs to be matched by the development of renewable technologies.”
“There is widespread recognition of the need to reform our economic indicators to reflect the demands of sustainability.
Under the European Union's Fifth Environmental Action Programme, member states are committed to develop pilot systems of 'environmental adjusted national accounts' by 1995, with a view to adopting them by the end of the decade.
There are a number of approaches in operation or being developed around the world, ranging from 'satellite accounts' placed alongside conventional GDP, as in Norway and France, to more ambitious systems being developed by the OECD and the Netherlands.”
“The problem with developing alternative indicators is not just to design the indicators, but also to get them accepted.
The reason why GDP in its current, flawed form is such a problem is that it is so widely accepted and used as totem pole round which all debate must dance.
Any alternative needs to gain the same credibility to be useful.”
“Labour will initiate a nationwide consultation with the aim of reforming national accounting methods by the year 2000.
As an essential first step, official statistics will be placed under the control of an independent body, so that there can be no suspicion of government manipulating statistics for political ends (as the Conservative have done with, for example, unemployment figures).”
“Second, Labour will develop a reformed measure of national income, alongside existing GDP, which will remove some of the more obvious environmental anomalies.
Third, Labour will develop a range of indicators of National Economic Welfare (NEW), measuring resource depletion, pollution, and a number of social indicators.
Those used in the UNDP's Human Development Index could provide a basis.
The more open and inclusive the process,
the greater the chance that the NEW indicators that emerge will be accepted
as valid measurements of social progress.”
Introduction | Replacing GDP | ISEW explained | Make your own ISEW | View the results | International examples | How ISEW terms are calculated
